Australia has admitted the condition of the Great Barrier Reef is worsening and declined from "moderate" to "poor" in a report revealing the devastating toll wrought by extreme weather and pollution.

The much-awaited report was released following warnings by the United Nations that it will consider downgrading the heritage status of the famous 1,500-mile stretch of reefs and cays along the Queensland coast.

The government's report found the coral reefs were in a poor state and that seagrass was in a "very poor condition".

It said the overall condition of the world's largest coral reef had worsened since 2009 due to cyclones and floods, as well as agricultural pollution flowing into the water. Pollution levels had reduced but well below their expected targets of 50 per cent reductions by 2013.

The report found major flooding in 2010 to 2011 and the subsequent Cyclone Yasi reduced overall coral cover by 15 per cent.

The reef's main ecosystems were showing "declining trends in condition due to continuing poor water quality, cumulative impacts of climate change and increasing frequency and intensity of extreme events," the report said.

Environmental groups said urgent action was needed to protect the reef's coral – about three-quarters of which has died since the 1960s.

"The outlook for the reef is not good, but the situation isn't hopeless," said Nick Heath, from the World Wildlife Fund.

"We just need more investment, more targeted action in the most dangerous pollution hot spots."

Federal and state governments said today they would spend £230 million between 2013 and 2018 to reduce pollution from farms and improve water quality.

"There is still a great deal of work to do," said Mark Butler, the federal environment minister.

Australia is facing the embarrassing prospect of having the reef's heritage status downgraded and declared as "at risk" by UNESCO.

The organisation will decide on the reef's status by June next year. It has asked Australia to detail its plans to protect the reef from coastal development and from additional shipping and port construction, which is being undertaken to enable the state's coal and gas booms.